New climate authority to mimic RBA

If all goes according to the government’s plan, the new Climate Change Authority is going to end up looking much like the Reserve Bank of Australia.

The government flagged the creation of the CCA as part of its ‘‘Clean Energy Plan’’, built around a carbon price, announced by Prime Minister Julia Gillard yesterday.

It will review and advise the government on a number of aspects of climate policy, including carbon farming, ways households might be encouraged to make voluntary cuts to emissions and how well the system is working.

Most importantly, though, the CCA will set intermediate targets for greenhouse gas emissions, advising on the best path toward the target of eventually cutting emissions by 80 per cent by 2050, just as the RBA sets a target for inflation as the best way to achieve full employment.

After the first three years of fixed-price permits to emit greenhouse gases, intending emitters will have to buy permits.

The total amount emitted will be determined by the number of permits issued and the authority will recommend how many of those permits there will be.But the CCA will not have unfettered power to set caps on emissions.

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‘‘The government will make the final decisions,’’ the government said in the plan published on Sunday.

In the same way, the RBA - despite its much vaunted independence - would not have the power to override the government’s wishes on inflation if push came to shove.

But although the CCA will not be all-powerful, it will be independent - it will be set up as an independent statutory authority, like the RBA - and so will its advice, just as the RBA’s is.

And there will be consequences for the government if it rejects the CCA’s advice and opts for a different cap on emissions in the regulations to be announced by the end of May 2014.

‘‘If the pollution caps presented in the regulations differ from the recommendations of the authority, the government will justify the difference in its response,’’ according to the plan.

This is a strong echo of the Reserve Bank Act, which lays out the mechanism to be followed if the government and the RBA have a difference of opinion.

If the government chooses to override the RBA, it can do so, but then has to table before both houses of parliament, not the government’s own reasons for overruling the RBA, but a statement from the RBA on what it thinks about the whole affair.

Not surprisingly it is a weapon no government has chosen to fire. And it will be a brave government that chooses to go against the CCA, made up of ‘‘nine experts with a particular focus on climate science, economics, climate change mitigation, emissions trading, investment and business’’. Not to mention the supporting staff.

And the CCA will be chaired by Bernie Fraser, who has gone down this road before. He was at the helm of the RBA from September 1989 to September 1996, the time the RBA established its independence, changed the central bank’s communication policy to put monetary policy into the news headlines, and set up the now well-understood inflation target.

The only thing the RBA has that the CCA doesn’t - not yet, anyway - is the support of both sides of politics.